4 . 

THIEA?L~TT~RNEY GENERAL 

OFTEXAS 

Honorable J. W. Edgar Opinion No. WW-147. 

Commissioner of Education 

Texas Education Agency Re: 

Austin, Texas 

Authority of Vidor Independent School District to enter 

into a rental-purchase contract for acquisition of 

Dear Dr. Edgar: additional school facilities. 

We quote from your request for an opinion, dated May 

1, 1957, as follows: 

“The Vidor Independent School District, 

Orange County, is in need of additional school 

facilities. & reliable firm, Structo School 

Corporation, Boston, Massachusetts, has indicated an interest in designing, constructing 

and equipping the needed ‘modular plan’ school 

building on a suitable site to be designated 

by the Board of Education. It is contemplated 

after construction is complete to lease the 

building to the Board of Education for a length 

of time not exceeding 40 years. Upon payment 

of the agreed upon rentals and expiration of the 

agreed time, title to the building and site 

would rest in the Board of Education. . . . 

“In view of the ever increasing need for 

additional school buildings and facilities in 

this State, the possibilities for the acquisition of same under a contemplated modular plan 

construction-leasing plan wherein private companies or corporations would construct or have 

constructed the same under lease plan agreements 

entered into between local school districts and 

corporations or companies, and the importance 

that the question herein submitted be thoroughly 

considered and firm conclusions reached, we 

would appreciate an opinion from your office 

therein.” 

Following receipt of your request and as a result of 

a conference between a representative of this office and Mr. 
Honorable J. W. Edgar, page 2 (W-147) 

Chester Ollison of the Texas Education Agency it was mutually 

agreed that your request could be satisfactor i ly handled by 

our consideration of the following questions: 

lo Is an independent school district authorized 

to contract with reference to the rental of 

school buildings? 

2. What, if any, are the limitations with respect 

to the term or duration of such a contract? 

3. May an independent school district by such a 

contract pledge the available school funds of 

the district thereby guaranteeing the annual 

payment of rentals? 

In consideration of your first question, we refer to 

Section 2 of Article 2827 of Vernon’s Civil Statutes, which 

reads in part as follows: 

“Local school funds from district taxes, tuition fees of pupils not entitled to free tuition 

and other local sources may be used for . . . buying, building and repairing and renting school 

houses. . . .I’ 

The authorization to expend local funds for “buying, building, 

repairing, and renting school houses” necessarily bestows upon 

local school boards the right to contract with reference thereto. 

To hold otherwise would be contrary to the evident purposes of 

Article 2827 and so restrict said boards in the execution of 

their official duties as to be detrimental to the proper administration of our public school system. The provision of the 

proposed contract which provides that after the payment of stfpulated rentals for a period of forty years, the building shall 

become the property of the school district, does not materially 

alter the nature of the contract. 

Your second question involves the authority of the 

school board to so contract as will be binding on succeeding 

school boards. The statutes contain no express limitation upon 

the :duration or term of the type of contract here involved, and 

Texas Case Law upon the precise point is surprisingly limited. 

It has been held that the contracts of a Commissioners’ Court 

may not ordinarily be repudiated merely because the personnel of 

the body has subsequently changed. It is only where the employment by a Commissionerss Court is personal and confidential, as 

in the case of ,an attorney, that it is held that one Commissioners’ Court has no power to bind its successors. For example, 
. _ 

Honorable J. W. Edgar, page 3 (W-147) 

the rule is not applicable to contracts essential to the performance of public works. 

(Comm.App.~, 

Gulf Bitulithic Co. v. Nueces County, 

11 S.W.2d 305, 34 Tex.Jur., 45 The case of 

(Civ.App.) 65 S.W.2d 417,3ie1d that a change 

in the membershi; of a school board, prior to approval by the 

county superintendent of valid teachers’ contracts previously 

made, did not authorize the new board and the superintendent 

arbitrarily to revoke such contracts, without any charge of fraud, 

imposition or mistake. 

We see no reason why the foregoing general rules would 

not have application to the proposed contract here under consideration. We do not say, however, and neither do the foregoing 

authorities, that a school board may arbitrarily and designedly 

unde,rtake to tie the hands of future boards in the orderly and 

economical administration of the school by entering into contracts of long duration contrary to the public interest. In the 

exercise of discretion conferred upon them in such matters, school 

boards must be guided in their decisions only by matters affecting the public interest and act in reasonable accordance with the 

necessities of the circumstances confronting them. The case of 

Board of Com’rs of Edwards Countv Simmor~ 151 P.2d 960, sets 

forth the general rule in the following term;: 

“The test generally applied is whether the 

contract is an attempt to bind successors in 

matters incidental to such successor’s administration and responsibility, or whether it is a 

commitment of a sort reasonably necessary for 

protection of public property, interest, or affairs being administered, and in the former case 

the contract is generally held to be invalid and 

in the latter case valid.” 

The term or duration of the contract in question is unusually long. It goes without saying that the organization and 

needs of our school districts are undergoing constant change. To 

reasonably project the needs of a particular school district for 

some forty years, and to commit it to a definite course of action 

in light of such projection, would require considerable vision 

and foresignt. In view of these considerations, we have no doubt 

that the courts would subject such a contract to the closest scrutiny. As to whether the courts would uphold it must depend in 

each instance upon the existence of such facts and circumstances 

as to render same amenable to the peculiar needs of the school 

district e Only the Board of Trustees, in the exercise of sound 

and reasonable discretion, can initially determine the existence 

or non-existence of such supporting factors. In any event, the 

authority of a school board to so contract is necessarily limited 
. _ 

Honorable J. W, Edgar, page 4 (WW-147) 

by our answer to your third question which follows0 ’ 

The school district cannot, however, by means of such 

a contract, pledge the future revenues of the school district 

for the payment of rentals as same accrue. School trustees have 

no legal authority to create any indebtedness which cannot be 

liquidated by application of available school funds of the district for the scholastic year in which the debt arises. 37 Tex. 

Jur. 972. Article 2749 of Vernon’s Civil Statutes prohibits a 

common school district from creating a deficiency debt in making 

contracts with teachers. The courts have expanded the rule to 

include debts generally. Teag,ue Independent School District et 

al. v. Mason. t al er v. Y 

1025 

233 B.W 2d l’/b C lli 

j First Nationa;‘Bank of ithens 5. iur 

eacockgmeWWe 

chison Independent 

School District, 114 S.W.2d 382; Trustees of Crosbv Indenesdent 

School District v. West Disinfecting CQ., 121 S.W.2d 661. 

Section 3 of Article VII, Constitution of Texas, provides in part that the “Legislature may authorize an additional 

ad valorem tax to be levied and collected within all school districts. a *for the further maintenance of public free schools, 

and for the erection and equipment of school buildings therein.” 

Articles 2784e, 2785, 2786 and 2?87 are the enabling bond and 

tax statutes pursuant to the Constitutional provision. Article 

2784e authorizes the voting of bonds and the levy of a bond tax 

“for the purchase. construction. eo. ir auioment of public 

free school buildings within the &tts Es zuch district and 

the purchase of the necessa.ry sites therefor. . *‘I 

added) . 

&nphasis 

Article 2787 requires that the proceeds of such bonds 

issued and sold “shall be disbursed only for the purpose for 

which the said bonds were issued.” It is noted that ,there is 

no statutory or constitutional provision authorizing the voting 

or issuance of bonds for leasing or renting of school buildings. 

The conventional method for financing long-term obligations in connection with school construction projects is 

through the issuance of bonds and the levy of a tax for the retirement of same as provided by Articles 27&e, 2785, 2786 and 

2787. This method offers reasonable guarantees of protection 

to all parties which the proposed lease-purchase method does 

not and cannot fully offer e 

In view of the foregoing and with respect to the third 

quest ion propounded, we conclude: 

1. Annual rentals accruing under the proposed 

lease-purchase contract could be paid solely from 

local surplus maintenance funds of the district* 
Honorable J. W. Edgar, page 5’ tww-147) 

2. Bonds cannot be voted for the purpose of 

renting or leasing a school building and 

It necessarily follows that bond proceeds 

could not ordinarily be used for paying 

such rentals. 

3. The ability of the school district to pay 

the required rentals would be contingent 

upon the availability of surplus maintenance funds which could be used for such 

purposes for the particular year in which 

the rental became due. The rental accruing in one year but not paid, due to a lack 

of available funds, could not become a contractual liability against the funds of a 

subsequent year even though there should be 

surplus funds available for such purposes 

in said year. 

negative. 

Your third question is accordingly answered in the 

SUMMARY 

The Vidor Independent School District is 

authorized by law to contract with reference to 

the rental of school buildings. The term or 

duration of such a contract rests within the 

sound discretion of the Board of Trustees in 

light of the needs and circumstances of the district. The school cannot, however, by means of 

such a contract pledge the future revenues of the 

school district thereby guaranteeing to the 

builder-owner the payment of rentals as same actrue , since school trustees have no legal authority to create any indebtedness or obligation which 

cannot be liquidated by application of available 

school funds of the district for the scholastic 

year in which the debt arises. 

Yours very truly, 

WILL WILSON 

Attorney General of Texas 

LP:wam:wb 

Leonard Passmore 

Assistant 
-- 

Honorable J. W. Edgar, page 6 (Wd-147) 

APPROVED: 

OPINION COMMITTEE 

H. Grady Chandler, Chairman 

Wallace Finfrock 

Lonny Zwiener 

Houghton Brownlee, Jr. 

REVIEWED FOR THE ATTORNEY GENERAL 

BY: George P. Blackburn